Microsoft has revealed that the cost incurred from its Xbox 360 hardware failure would exceed USD1 billion. The “general hardware failures” is said to be serious and could potentially weigh the company down in stiff competition with Sony and Nintendo. In view of this, Microsoft announced the extension of warranty coverage to three years for the console that exhibited three red flashing lights or popularly known as “Red Ring of Death” in gaming community. Hopefully this act will able to regain its reputation in high end gaming console market segment.


The issue was surfaced since the Xbox 360 console launch back to 2005. The symptom of failure is indicated by three red flashing lights in front of the console panel. Microsoft has not disclosed the actual failure rate but it is believed that the failure rate has reached as high as 33 percent based on retailers’ feedback. Actual root causes were not announced but some technical experts said it could be due to overheat or actual hardware lockup failure. Nevertheless, necessary actions have been in place to rectify this issue.

The company will be bearing the repair and shipping cost of all affected Xbox 360 consoles that experience this general hardware failure. For those customers that have already paid for the cost of repairs, they will be reimbursed back the full amount.
Microsoft has missed the shipment target of 12 million by end of June with just 11.6 million units since the product launch back to November 2005, which puts its rank to No. 2 after Nintendo’s Wii in terms of sales volume.